In Civil Appeal No. 4956 OF 2022-SC- HC erred in entertaining petition under Article 226 of Constitution bypassing statutory remedies available under MVAT and CST Acts: Apex Court quashes Bombay HC order setting aside Notice of demand of tax & Assessment Order Justices M.R. Shah & B.V. Nagarathna [20-09-2022]

Read Judgment: THE STATE OF MAHARASHTRA AND OTHERS V. GREATSHIP (INDIA) LIMITED 

Mansimran Kaur

New Delhi, September 21, 2022: While considering a matter pertaining to the Maharashtra Value Added Tax, 2002  and Central Sales Tax Act, 1956, the Supreme Court has opined instituting a petition under Article 226 of the Constitution before the High Court was not required as the statutes itself provide for the right of appeal against the assessment order passed by the Assessing Officer and against the order passed by the first appellate authority, an appeal/revision before the Tribunal.

“In that view of the matter, the High Court ought not to have entertained the writ petition under Article 226 of the Constitution of India challenging the assessment order in view of the availability of statutory remedy under the Act”, the Division bench of Justice M.R. Shah and B.V. Nagarathna said.

The factual background of this case was such that the respondent – original writ petitioner was subjected to proceedings under the Maharashtra Value Added Tax, 2002  and Central Sales Tax Act, 1956.  The Assessing Officer issued a notice of assessment calling upon the assessee to produce relevant documents and also to show cause as to why it should not be assessed under the relevant provisions of Section 23 of the MVAT Act.

The writ petitioner submitted the required documents and also showed cause by letter dated May 3, 2018.  A personal hearing was fixed on March 16, 2020, however, on  the Assessing Officer was not available on the said date and therefore, no hearing took place.

 According to the writ petitioner, multiple telephone calls were made to the Assessing Officer for personal hearing, but no such hearing materialised.The Assessing Officer passed an order determining the tax liability along with interest and penalty under the MVAT Act and CST Act. Without preferring any appeal before the first appellate authority, the respondent – assessee – original writ petitioner filed a writ petition before the High Court challenging the assessment order passed under the provisions of the MVAT Act and CST Act alleging inter alia that no order was passed in March and it was passed in the month of July, 2020, which was beyond the period of limitation. 

The High Court entertained the said writ petition against the assessment order under Article 226 of the Constitution of India and passed the impugned judgment quashing and setting aside the assessment order and the demand notice. Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the High Court, the State of Maharashtra and others had preferred the present appeal.

After considering the submissions of the parties at length, the Court noted that against the assessment order passed by the Assessing Officer under the provisions of the MVAT Act and CST Act, the assessee straightway preferred writ petition under Article 226 of the Constitution of India. It was not in dispute that the statutes provide for the right of appeal against the assessment order passed by the Assessing Officer and against the order passed by the first appellate authority, an appeal/revision before the Tribunal.

“In that view of the matter, the High Court ought not to have entertained the writ petition under Article 226 of the Constitution of India challenging the assessment order in view of the availability of statutory remedy under the Act”, the Court observed. 

In view of the above and in the facts and circumstances of the case, the High Court seriously erred in entertaining the writ petition against the assessment order. The High Court ought to have relegated the writ petitioner – assessee to avail the statutory remedy of appeal and thereafter to avail other remedies provided under the statute, the Court further noted. 

Under tsuch circumstances, the impugned judgment and order passed by the High Court was thus quashed and set aside. The writ petition filed before the High Court challenging the assessment order and consequential notice of demand of tax was also dismissed.The Bench ordered the respondent – assessee  to avail the statutory remedy of appeal and other remedies available under the MVAT Act and CST Act. It was further directed that if such a remedy is availed within a period of four weeks, then the appellate authority shall decide and dispose of the same on its own merits in accordance with law without raising any question of limitation, however, subject to fulfilling the other conditions, if any, under the statute. In light of the aforesaid observations, the present appeal was allowed in the aforesaid terms.